Have McKinsey and its consulting rivals got too big?

With labor becoming fungible in the eyes of c-suites, the holders of institutional knowledge are the libraries of the consulting firms. Consulting firms also have tech talent that traditional businesses had no access to in the past, so any large scale data driven related project is done with consultants.

However: 1. The costs are insane and probably we reached the point where the benefits do not justify the prices they are charging. 2. Wfh is a cheat code to get access to cheap tech personnel that is pissed with the RTO of big tech. I keep hearing tech folks working at traditional manufacturing shops remotely these days.

The economics of consulting are pretty raw: they basically arbitrage the hourly rate of folks. They pay you X and then bill you for X*1.3 (minimum). Folks are starting to realize they could just go direct to the customer, and the recent non-compete uncertainty has made a dent in the quality of talent these places have on their bench. Not to mention most of the talent at these shops are just window dressing for cheap offshore labor that actually does the work with mixed results.

More likely they pay you X and they charge 3X, but yes I agree.

This is a surprising take, considering the consultants I’ve worked with never took the trouble to learn anything about the business despite sitting shoulder to shoulder with us for weeks, and then proceeded to give us spectacularly terrible technical advice. “You need machine learning for this. Trust us, we’ve done this before.” They hadn’t, and it became clear they’d wasted our time and hadn’t listened to a word we said.

I have yet to see big consultant company to improve things on technical levels. They are great at talking to upper levels of management and avoiding accountability for results.

They don't improve how things run.

I’m pretty sure my average multiple is 6x

There is nobody left, old enough, to remember that the last project with that consulting firm failed.

Are we living in middle ages that electronic records don't exist of what happened in the past engagement. Maybe one can locate the last McKinsey dossier on OneDrive? The problem is and always was of incentives of people involved.

Traditional mfg companies don’t understand tech. They don’t like that tech employees demand higher wages and benefits and hire bottom tier talent or try to convert existing non tech employees into programmers.

Generally there Firms prize "first principles" thinking and don't put a ton of effort into leveraging previous engagements. Think of it like how engineers will throw out a solution and rebuild it rather than understand and build upon it.

It is also quite difficult to surface useful information amongst all the noise in the giant archive of documents

Which kinda makes sense. The work of an SWE at big tech can bring in a ton of cash due to (almost) infinite scaling of software and (almost) zero marginal cost.

But as an SWE at a manufacturing company, how much can your work increase their revenue/profit? The bulk of their income is still coming from the widget/commodity they are producing.

Would you trust a random soggy doc for which you don't know the person who wrote it and their competence, or the flashy deck from McKinsey? The answer is 99% of the times: McKinsey.

Only time that answer is different is when a person in power is still around and they pretty much veto the engagement with a consulting company.

Oh no, that's not true at all. They care about data, and they will actually tell you themselves that they already did it for you - right after convincing you that you need to do it again.

I mostly agree, but for sake of honest discussion... Why are the mechanical/electrical engineers also not paid well at these companies? Even at these companies capable of achieving massive scale with new products they design. Think something like 3M, making billions of units of widgets and commodities.

3x is standard, you should push for a 2x raise. You might have to jump ship twice to do that

Depending on their profit margins and the talent scarcity they do pay.

A seasoned cheme at oil and gas was easily pulling 300k + 2M pension + 10% 401k match

So have not dealt with McKinsey specifically, but other MBA/Consultant types I feel like they treat software engineering like we are ditch diggers -- they just request things and expect it to magically happen.

So most of the requests are insipid, some are impossible, and they have no desire to spend effort to understand either.

Don’t even need that trust when your org probably has some intensely bureaucratic procurement setup where past performance has zero influence on a new tender, so long as they can undercut the competition.

Their reputation doesn’t come from the quality of their work but their size: they can just muscle their way in.

It’s not marginal utility it’s supply vs demand. The reason SWEs can demand so much is because there are a lot of options to branch out solo or small company so companies need to pay competitive wages. The employees are therefore able to capture more of their value.

For chemical or mechanical engineers they need a lot of infrastructure to do work so employees are more locked to employers and wages are not as competitive. Employees are unable to capture their value without the employer therefore they get a smaller piece.

Also SV has an obsession with hiring the best while most large manufacturers consider heads interchangeable with only a few spots reserved for top talent.

Lives on an oil rig doing to get that